Rick and Sherry Rought of Gowen paid cash for the old house, a
$14,000 fixer-upper, for their daughter, Hannah, while she attended
Ferris State University.

Seven months later, after the couple started repairs and moved in
furniture, Deutsche Bank National Trust Co. foreclosed, hired a company
to "trash out" the Roughts' belongings, and changed locks and turned
off utilities, according to a lawsuit filed Monday in U.S. District
Court.

They believe that Deutsche, as trustee of Ameriquest Mortgage
Securities Inc., didn't realize the house, repossessed in 2006, was not
subject to foreclosure.

It is a nightmare that has happened across the nation as the economy
tanked, the couple's attorney, Carlin Phillips, said at a press
conference.

"It's like the Wild West right now in the foreclosure industry," he said.

No doubt that Deutsche Bank's underwriting, packaging and selling off toxic assets to public banks and pension funds have contributed to stellar earnings. But, as Anna Sleegers comments in the Frankfurter Rundschau, there is littler or no economic benefit to the bank's billions in earnings:

April 29, 2010

I would have expected Laura Bush's new memoir Spoken from the Heart to be a full-throated defense of her husbands failed presidency. But I have to admit I didn't expect she would try to deflect blame for the disastrous invasion of Iraq in pursuit of fictitious WMDs onto one of the fiercest critics of Bush's war dreams:

The usually charitable Mrs. Bush chastises the Democrats Nancy Pelosi and Harry Reid for their “nasty personal criticisms of George,” and she writes that she has often wondered if Jacques Chirac of France or Gerhard Schröder
of Germany “could have done more” to prevent the Iraq war, “if one of
them could have persuaded Saddam to go into exile, if they could have
conveyed that the United States was not bluffing.”

So Schröder, who, along with Joschka ("I am not convinced") Fischer, warned that invading Iraq would be a huge strategic mistake, are to blame for the Bush/Cheney/Rumsfeld folly that have cost hundreds of thousands of lives and cost US taxpayers and their grandchildren (up to now) $750 billion.

Is this another example of the "epistemic closure" - ie stupid thinking - that characterizes "conservative thinking" in the US today?

Elsewhere in the book - which I am not likely to read - Mrs Bush has delusional fantasies that she and her husband were "poisoned" in Germany:

(In her memoir the former first lady writes about how both of them along with other staff members suddently got ill during the G-8 Summit in Heliigendamm and were bedridden. Doctors and Secret Service investigated the possibility that this was a case of poisoning, however the results were inconclusive....)

Perhaps the biological WMDs were not in Iraq after all, but rather in Heiligendamm?

April 27, 2010

First the German CDU does something very positive in appointing the Turkish-born Aygül Özkan as the minister for social affairs in the state of Lower Saxony, and then they immediately express buyer's remorse when Frau Özkan quite rationally asked for religious symbols to be taken out of public schools in Germany:

School should be a neutral place," said Ozkan, 38, adding that the Islamic headscarf should also not be worn in class.

She is expected Tuesday to become the first female state minister of
Turkish origin, as a member of Chancellor Angela Merkel's centre-right
Christian Democratic Union (CDU).

The premier of Lower Saxony, Christian Wulff, also CDU, reacted
immediately, saying: "The regional executive considers religious
symbols, especially the cross, to be the sign of a tolerant education,
based on Christian values."

Others reacted with more vigour. Stefan Mueller, from the CDU's
Bavarian sister party, the CSU, described Ozkan's remarks as "so
absurd, it's scary."

"Politicians who want to ban crucifixes in schools should consider
whether they really have a place in a Christian Democratic party," he
added.

According to media reports, she has received death threats and has been placed under police protection.

There is no mystery where the death threats are coming from. The hate blog Politically Incorrect called Frau Özkan "Muslim Trojan Horse", the "Catholic" Holocaust-denial site kreuz.net is outraged that a "Muslim" has a role in a "Christian" party, and the neo-Nazi NPD writes that she represents a fifth column of Islamic extremism.

1. The affixation of a cross or crucifix in the classrooms of a State
compulsory school that is not a denominational school infringes Art.
4(1) Basic Law.

The CDU has to think about what the meaning of the "C" is in the party in a modern secular democracy. If membership or allegiance to Christianity is a precondition to party membership, then the future looks very bleak indeed for the CDU/CSU.

April 24, 2010

Recently I reviewed Der Mythos Amerika by Manfred Henningsen, professor of political science at the University of Hawaii. Professor Henningsen kindly agreed to respond to some of my questions about his book.

Dialog International: It has been more thirty years since you came out
with “Der Fall Amerika”. What motivated you to write “Der Mythos
Amerika”? Who is your intended audience?

Henningsen: I had promised at the end of my
book Der Fall Amerika (1974)that I would follow up this volume,
which dealt primarily with European anti-Americanism from the French Revolution
to the early 1970s, with a book on American self-understanding. I wanted to
make Germans realize that America
is not an appendix to Europe. The main thesis
of the 1974 book was that Europeans, not only Germans, were unable to understand
the United States.
They engaged in all kinds of ways of substituting European realities for American
experiences.

In Der Mythos Amerika I try to make a German-speaking audience come to
terms with an America
they haven’t seen or refuse to see. This is however a critical reading of America. The
longer I have lived in this society the more I have realized how difficult it
is for many Americans to recognize the phenomena of evil that belong to the
historical record of their society. Their basic belief in the exceptional qualities
of American history remains unshaken. The USA is for them and the majority of
American politicians who represent them the best and the greatest society in
human history.

Dialog International: Have anti-American attitudes among European
intellectuals changed much in the meantime?

Henningsen: The attitudes of European
intellectuals toward the U.S.
have not changed dramatically, even if the election of Barack Obama in 2008
undermined the selfconfidence with which they articulated their prejudices. These attitudes
thoughare not always
anti-American, very often they are simply based on a lackof knowledge.

Junge Freiheit (literally "Young Freedom") is the most influential paper of "academic" right-wing extremism in Germany. The Berlin weekly espouses volkish nationalism
along with historical revisionism. The paper is generally shunned by
the German political establishment and has caught the attention of German
authorities for its extremism and anti-democratic point of view. But
the editors of Junge Freiheit have a new model for political engagement that they want to transplant to Germany: the US Tea Party movement.

This week's issue of Junge Freiheit has a breathless report
on the Tea Party along with an interview with one of its leaders. Amy
Kremer. Below are some excerpts from the article :

Ask what you can do for your country. Millions of Americans are doing
just that thee days and have a practical response: They sacrifice their
time, their energy and their money to join in with the "Tea Party"
movement. They are acting against the tax and borrow left-wing regime
of Barack Obama and his elite cadre who are systematically looting the
country while disenfranchising the people.

The editors are convinced that Germany needs a Tea Party as well, since the "socialists" have all but destroyed the nation.

To German ears it sounds like a fairy tale from the New World. The same
kind of state intervention and disenfranchisement, which is driving the
Americans into the streets, is much worse here, thanks to the
socialists and social democrats of all stripes from all the different
parties we have.

But the editors are skeptical that such a grass-roots movement could
ever succeed in Germany. For one thing, it would face a hostile
established media in Germany, whereas the US media is sympathetic to
the Tea Partiers (they are correct on this point!). Still, one can
dream.

Enough with the tax and debt madness. We don't just want to keep giving
our money to the elites and the state bureaucrats who are ruining our
lives. No longer will we throw our money down the throats of the
parasites and bankers who sell us out to the functionaries of European
Union. The message of the American "tea party" movement can be
translated without much difficulty to Germany What are we waiting for?

SO, these are the German fans of the Tea Party. Interestingly enough, Junge Freiheit is also aligned with the US Webzine Alternative Right, the mouthpiece of "intellectual" racism.

April 17, 2010

As soon as I read that one of the major suckers victims of Goldman Sachs' CDO scam was Germany's IKB Deutsche Industriebank AG I knew that this would be coming sooner or later:

Angela Merkel’s gov’t is considering taking legal action against Goldman Sachs relating to the CDOs itself to a German bank.

“Buyers included German bank IKB Deutsche Industriebank AG — an early victim of the financial crisis that was rescued by the state-owned KfW development bank among others.

The Welt am Sonntag newspaper quoted Chancellor Angela Merkel’s spokesman, UIrich Wilhelm, as saying that German regulator BaFin will ask the U.S. Securities and Exchange Commission for information.

“After a careful evaluation of the documents, we will examine legal steps,” he said, according to the report.

Is worth pointing out that Merkel already has hostility towards Goldman Sachs due to the firm’s apparent role in Greek efforts to conceal the size of the country’s deficit in order to gain membership status into the EU as Greece struggled to comply with European Union limits.

From the reports I've read so far, it appears that IKB took a loss of $150 million on the junk securities it purchased through Goldman. That is a sizable loss, but not enough to make the bank insolvent. The German taxpayers had to put in about US$ 10 billion to keep IKB afloat, so where did the other losses come from? This great piece of investigative reporting from ProPublica provides some clues. In 2006, a hedge fund operating under the name of Magnetar teamed up with Deutsche Bank to create a CDO comprised of the very riskiest of subprime mortgage obligations. They named the security Orion:

Magnetar and Deutsche were deeply involved in creating Orion. "We want to make sure we control the deal," a banker who worked on it recalls them emphasizing.

One person involved in Orion recalls Deutsche's point person, Michael Henriques, and Magnetar's Prusko pressuring the CDO manager, a division of the Dutch bank NIBC, to include specific lists of bonds in the deal.

Prusko and Henriques told this person that the investors "needed more spread in the portfolio." More "spread" means more return and more risk.

Once Orion was created, Deutsche and Magnetar needed to find a sucker investor. Who would be an easy target for such a risky security?

One investor in Orion was a fund affiliated with IKB, a small German bank. Eventually, it invested in at least four more Magnetar deals. In mid-2007, because of the disastrous investments in subprime securities, the German government was forced to bail out IKB. The failure of the bank was an early warning sign of the global financial crisis.

At this time, I don't have any information on the total amount of fraudulent securities that Deutsche Bank sold to the IKB fund, but I am willing to bet the sum dwarfs the amount that Goldman sold. Let's see if Angela Merkel has the will and the courage to go after her good friend Joe Ackermann.

April 16, 2010

After the SEC filed suit against Goldman Sachs for massive fraud in the subprime mortgage market, Yves Smith of Naked Capitalism posted this:

Oooh, things are starting to get interesting.

A number of journalists and commentators (yours truly included) have
taken issue with the fact that some dealers (most notably Goldman and
DeutscheBank) had programs of heavily subprime synthetic collateralized
debt obligations which they used to take short positions. Needless to
say, the firms have been presumed to have designed these CDOs so that
their short would pay off, meaning that they designed the CDOs to fail.
The reason this is problematic is that most investors would assume that
a dealer selling a product it had underwritte was acting as a
middleman, intermediating between the views of short and long
investors. Having the firm act to design the deal to serve its own
interests doesn’t pass the smell test (one benchmark: Bear Stearns
refused to sell synthetic CDOs on behalf of John Paulson, who similarly
wanted to use them to establish a short position. How often does
trading oriented firm turn down a potentially profitable trade because
they don’t like the ethics?)

And the investigative journalism site ProPublica writes about how Deutsche Bank wanted to maintain its top position in the CDO market, teaming up with the hedge fund Magnetar in a spectacular deal:

Among the other banks that Magnetar approached during that time was
Deutsche Bank, with whom it had teamed up to do its first deal months
earlier. Deutsche Bank was anxious for business in order to maintain
its standing as one of the top CDO banks, according to one of its
bankers. Deutsche recommended CDO manager State Street Global Advisors.

[...]Deutsche, Magnetar and State Street called the $1.6 billion CDO they
created Carina, a constellation whose name in Latin means a ship's
keel. In November 2007, Carina had the distinction of being the first
subprime CDO of its kind to be forced into liquidation.

On Monday Pope Benedict XVI will mark five years at the helm of a Roman Catholic Church deep in crisis. I looked at some of my blog posts from then and found this hopeful piece on a meeting between the pope and his former friend and collaborator Hans Küng. I viewed this meeting at the time as a sign of reconciliation and change. How these hopes have been dashed in the ensuing five years.

Today Hans Küng published a devastating letter to the bishops of the church where he urged them to take action. The Open Letter appeared in several major newspapers, including the Irish Times and the Sueddeutsche Zeitung (deutsche Version hier):

Joseph Ratzinger, now Pope Benedict XVI, and I were the youngest
theologians at the Second Vatican Council from 1962 to 1965. Now we are
the oldest and the only ones still fully active. I have always
understood my theological work as a service to the Roman Catholic
Church. For this reason, on the occasion of the fifth anniversary of
the election of Pope Benedict XVI, I am making this appeal to you in an
open letter. In doing so, I am motivated by my profound concern for our
church, which now finds itself in the worst credibility crisis since
the Reformation. Please excuse the form of an open letter;
unfortunately, I have no other way of reaching you.

Missed is the opportunity for rapprochement with the Protestant
churches: Instead, they have been denied the status of churches in the
proper sense of the term and, for that reason, their ministries are not
recognized and intercommunion is not possible.

Missed is the
opportunity for the long-term reconciliation with the Jews: Instead the
pope has reintroduced into the liturgy a preconciliar prayer for the
enlightenment of the Jews, he has taken notoriously anti-Semitic and
schismatic bishops back into communion with the church, and he is
actively promoting the beatification of Pope Pius XII, who has been
accused of not offering sufficient protections to Jews in Nazi Germany.

Missed is the opportunity for a
dialogue with Muslims in an atmosphere of mutual trust: Instead, in his
ill-advised but symptomatic 2006 Regensburg lecture, Benedict
caricatured Islam as a religion of violence and inhumanity and thus
evoked enduring Muslim mistrust.

Missed is the opportunity for
reconciliation with the colonised indigenous peoples of Latin America:
Instead, the pope asserted in all seriousness that they had been
“longing” for the religion of their European conquerors.

Missed
is the opportunity to help the people of Africa by allowing the use of
birth control to fight overpopulation and condoms to fight the spread
of HIV.

Missed is the opportunity to make peace with modern
science by clearly affirming the theory of evolution and accepting
stem-cell research.

Missed is the opportunity to make the spirit
of the Second Vatican Council the compass for the whole Catholic
Church, including the Vatican itself, and thus to promote the needed
reforms in the church.

Then comes the serious indictment of Ratzinger/Benedict with respect to the child sex abuse scandal that is destroying the church:

There is no denying the fact that the worldwide system of covering up
cases of sexual crimes committed by clerics was engineered by the Roman
Congregation for the Doctrine of the Faith under Cardinal Ratzinger
(1981-2005). During the reign of Pope John Paul II, that congregation
had already taken charge of all such cases under oath of strictest
silence. Ratzinger himself, on May 18th, 2001, sent a solemn document
to all the bishops dealing with severe crimes ( “epistula de delictis gravioribus” ), in which cases of abuse were sealed under the
“secretum pontificium” , the violation of which could entail
grave ecclesiastical penalties. With good reason, therefore, many
people have expected a personal mea culpa on the part of the former
prefect and current pope. Instead, the pope passed up the opportunity
afforded by Holy Week: On Easter Sunday, he had his innocence
proclaimed “urbi et orbi” by the dean of the College of Cardinals.

Hans Küng has a more positive assessment of the bishops than I do if he believes that they will hear his criticism and take action. In the US, at least, the bishops are sheep who happily conspired with the Vatican in covering-up crimes. Today they are a reactionary force that impedes any positive change. Over and over the bishops have demonstrated that they have nothing but contempt for their flock.

April 14, 2010

Angele Merkel is traveling in the US this week and is fulfilling a girlhood dream of visiting California. Dirk Kurbjuweit in Der Speiegel has a perceptive article on the cool relationship between the German chancellor and President Obama:

But for Merkel, the hardest pill to swallow is that America, her
paradise, has brought her President Barack Obama. In the election, she
favored his opponent Hillary Clinton, out of "female solidarity."
Besides, Obama poses a threat to the view, so useful to Merkel, that
politics cannot be fun and inspiring.

Part of the problem here is that Germans do not completely understand the political realities in Washington today. Charisma can only go so far when the US Senate has become politically dysfunctional. Kurbjuweit writes:

Obama's approach to politics is more individualistic. He too is
dependent on an army of advisers, but when push comes to shove, his
will and charisma are crucial to making decisions happen. Merkel takes
a collectivist approach. She identifies the goals of other
participants, blends them with her own needs and turns the whole thing
into a fail-safe policy that allows her to remain popular.

The irony here is that Obama's instinct is to conciliate - just like Merkel. He honestly thought that he could achieve bipartisan consensus on tackling America's most intractable problems. David Remnick, in his brilliant new biography of Barack Obama (The Bridge: The Life and Rise of Barack Obama) , writes about how from his days as a student at Harvard Law School Obama's impulse was to always try to reconcile or synthesize opposing views. That impulse has worked out well for Angela Merkel, but it is impossible in the US today, where the Rebublican opposition has only one mission - to block and defeat Barack Obama at every turn, regardless of the consequences for the American people.

April 10, 2010

April is National Poetry Month, and so it is a good excuse to read and translate some favorite poets. Günter Eich (1907-1972) has always been been one of my favorite poets of the immediate postwar period. His sober look at the grim reality of Germany and his own life helped to revive German as a language for lyric poetry. In Pfannkuchenrezept he incorporates a collage of American brand names and places into a juxtaposition of idyllic childhood memories with the deprivations of the present. Eich spent several months in an American POW camp in 1946.

The powdered milk of the Harrison Brothers Company, Chicago,the egg powder from Walkers, Merry Maker & Co, Kingstown, Alabama,the flour that the German camp bosses did not misappropriateand the three day ration of sugar mixed in with the chlorinated water of the Old Father Rhine,makes for a nice batter.You fry it up in eight men's ration of faton the lid of a tin can and on the fireof long parched grass.Then when you eat it together,each gets his one-eigth portion,oh then you can feel it melt on the tongue,in a lush second the joy of childhood returns,as you sneak into the kitchen, to beg for a piecedough just before Christmas,or a piece of wafer, because company was coming on Sunday afternoon,in that vanishing second you can smell the childhood aroma of baking, grab onto mother's apron strings ,oh the warmth of the stove , mother's warmth, - until you suddenly wake up and find your hands are emptyand you look at each other hungrily and sullenly crawl back into your hole. The cakewas not properly split and you alwayshave to be careful that you do not miss out.(Günter Eich)